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Citigroup CEO Jane Fraser’s massive restructuring to cost $1B

Citigroup Chief Financial Officer Mark Mason said Wednesday that the bank’s largest reorganization in decades will cost about $1 billion in restructuring and severance-related costs.

The overhaul is expected to be fully completed by the end of the first quarter of next year, Mason told the Goldman Sachs U.S. Financial Services Conference. The changes made by CEO Jane Fraser include slimming down the management team and potentially laying off thousands of employees.

He added that simplifying the bank’s structure would reduce annual expenses to $51 billion to $53 billion, helping Citi move closer to its profit goals.

The bank’s stock rose nearly 4% in afternoon trading, outperforming its larger peers.

The bank maintained its 2023 cost estimate at $54 billion, excluding a special assessment of about $1.65 billion from the Federal Deposit Insurance Corporation.

Some of the approximately $200 million in restructuring charges will likely be recorded in the fourth quarter, Mason said.


Citigroup CEO Jane Fraser speaks at an oversight hearing of the Senate Banking, Housing and Urban Affairs Committee investigating Wall Street companies on Capitol Hill. AP

After the restructuring, the bank aims to achieve a medium-term return on tangible common equity of 11% to 12% on average over the medium term. ROTCE is a measure of corporate performance.

Mason said Citi’s full-year sales for 2023 will likely be about $78 billion, at the lower end of his previous forecast.

Mr Mason cited Argentina as a factor in reducing City’s revenue.

“The Argentine elections, for example, will result in hundreds of millions of dollars of revenue pressure,” he says. “Given the currency impact, that’s the cost of doing business there for us.”


The overhaul of Citi is expected to be fully completed by the end of the first quarter of next year.
The City’s overhaul is expected to be fully completed by the end of the first quarter of next year. Reuters

organization

Last month, Citi announced the latest phase of a sweeping reorganization, with leadership cuts and executive changes within the division. The bank is reducing its management layers from 13 to eight as part of its biggest overhaul in decades.

Fraser aims to cut bureaucracy and increase profits while boosting its stock, which has lagged behind its peers. “To truly transform Citi once and for all, we need to change the way Citi is run,” Fraser told analysts on a third-quarter earnings call in October.

The third-largest U.S. bank by assets beat expectations for third-quarter profit, helped by higher trading revenue, investment banking fees and interest payments.

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